Pebble CEO Eric Migicovsky said in a statement Wednesday the company will shut down and no longer make smartwatches, selling its tech, software and other assets to Fitbit, as the fitness band maker pushes deeper into the ailing smartwatch market.

Fitbit confirmed the deal in a separate statement, noting the deal only applies to assets related to software and firmware development, not hardware.

"With basic wearables getting smarter and smartwatches adding health and fitness capabilities, we see an opportunity to build on our strengths and extend our leadership position in the wearables category,” said Fitbit co-founder and CEO James Park in a statement.

The acquisition signals Fitbit's interest in competing more aggressively in the smartwatch market. However, most smartwatch makers are taking a hit as consumer interest appears to be dwindling. Research firm IDC says basic wearables including fitness compromised 85% of the wearables market during the third quarter. Apple and its Apple Watch posted the biggest decline during the quarter, with shipments plunging 71%.

However, in a statement to Reuters, Apple CEO Tim Cook said sales of the Apple Watch have been "off the charts."

Financial terms of the deal were not disclosed, but according to Bloomberg, the deal is worth $40 million. Migicovsky will join the tech incubator Y Combinator, says the report. He did not confirm his plans after Pebble in the company's statement.

Migicovsky would only cite "various factors" for Pebble's demise. "In evaluating our future, we wanted to align with a company that shared our take on how wearable technology can bring delight and utility to our lives," he wrote.

Earlier this year, Pebble cut about 25% of its workforce, with Migicovsky citing a conservative fundraising environment in Silicon Valley for the smartwatch company's struggles.

Once a darling in the early days of the smartwatch market, Pebble has faced increased competition from companies including Fitbit, Apple and Samsung. Since first launching its Kickstarter campaign for the original Pebble watch in 2012, the company shipped more than 2 million devices worldwide.

The company was planning to launch a new smartwatch — the Pebble Time 2 — and the Pebble Core, a tiny device allowing users to use their smartwatch independent of their smartphone. Migicovsky says Kickstarter backers of the devices will receive full refunds.

Fitbit is expected to maintain service for Pebble, but some functionality could be reduced in the future, says Migicovsky.

Smartwatches had generated buzz as the next hot gadget, following in the footsteps of the smartphone. But smartwatch makers have struggled to give mainstream consumers reason to purchase one, says Gartner analyst Angela McIntyre.

"The greatest hurdle for fitness tracker and smartwatch providers to overcome is the consumer perception that the devices do not offer a compelling enough value proposition," she says.

Smartwatch makers still have a chance to woo mainstream consumers, says IDC research analyst Ramon Llamas, by introducing devices with better interfaces, a wider selection of apps, and the ability to connect without the need for a smartphone.

"Smart wearables have been down in recent quarters, but clearly not out," said Llamas. "As user tastes change, so will their needs."

The fall of Pebble has renewed focus on the fate of Jawbone, which once lorded over the wearables field as a pioneer with Nike. Both face plenty of competition from Fitbit, Pebble, Apple Watch and a slew of health devices that fit on the wrist and elsewhere.

There are wearables for all parts of the body now, says Morgan Reed, acting director of the Connected Health Initiative, a nonprofit that follows the wearables market. Moov has produced a tiny personal-training device that straps onto arms, ankles and other body parts. Lumo Lift created a small, lightweight wearable that tracks posture and daily activity. Hexoskin produced a sensor-embedded smart shirt. And Under Armour is looking into devices for shoes and shirts.

Jawbone CEO Hosain Rahman in recent months dismissed reports suggesting the San Francisco-based company had slowed production of its UP fitness trackers and sold remaining inventory to a third party, calling them "unequivocally false.”

Rahman declined comment because of pending litigation over trade secrets with Fitbit.